Nigeria. Pension Funds downsize investments in states by 36%
Pension Funds Administrators (PFAs) are now downsizing their investments in state governments’ bonds amidst fears that the states’ financial stability and their commitment to pensions are questionable.
Financial Vanguard’s findings in the data from the National Pension Commission, (PenCom) shows that the PFAs’ investments in state government securities fell by a huge 36 percent to N97.89 billion in the first half of 2021 (H1’21) from N152.93 billion in the corresponding period in 2020 (H1’20).
But the PFAs’ interest in Federal Government of Nigeria (FGN) securities spiked during the period with their total allocation in the asset class rising to N8.475 trillion, representing about 13.67 percent year-on-year (YoY) growth against the N7.5 trillion allocated to the FGN securities in H1’20.
This also represents a 4.6 percent year-to-date (YtD) increase from N8.102 trillion invested in FGN securities as at January 2021.
Moreover, while PFAs’ investments allocation to state government securities accounted for mere 7.7 percent of their total investments during the period, the allocations to FGN securities accounted for a whopping 66.96 percent of the total PFAs investments within the period.Total PFAs investment for the six month period stood at N12.66 trillion.
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